2015 (10) TMI 1792 - AT - Central Excise

Denial of CENVAT Credit - Inward Transportation Service - Held that - There is no dispute on account of availment of CENVAT credit on inputs. When there is no dispute regarding receipt of inputs, therefore, whatever transportation has been paid by the appellant on Inward Transportation Service is entitled for input service credit. Further, the Measurement Tolerance is on account of receipt of inputs and supply of finished goods. In these terms, it cannot be said the appellant has received the input in short quantity. Therefore, service tax on Inward Transportation is fully allowable as input service. - appellant has rightly taken the CENVAT credit on input service on Inward Transportation Service. - Decided in favour of assessee.

Summary

Issues:
Denial of CENVAT credit for Inward Transportation Service

Analysis:
The appellant appealed against the denial of CENVAT credit for Inward Transportation Service. The appellant procures gas from Gas Authority of India Ltd. through pipelines and supplies it to consumers. The appellant avails CENVAT credit on inputs, including Inward Transportation Service, and pays duty on the final product. The appellant records a shortage of gas lost during supply in their balance sheet due to Measurement Tolerance. The revenue contended that this shortage of inputs led to the denial of input service credit, prompting the initiation of proceedings and the subsequent impugned order. The appellant argued that the denial of input service credit for transportation of inputs was impermissible, emphasizing that Measurement Tolerance occurs during the manufacturing process, and any shortage should not result in credit denial.

The learned counsel for the appellant highlighted that the denial of input service credit on transportation while there was no dispute regarding the receipt of inputs was unjustified. It was emphasized that the Measurement Tolerance was a result of the input receipt and the supply of finished goods, indicating that the appellant did not receive the inputs in short quantity. The appellant's position was that the payment made for Inward Transportation Service should entitle them to input service credit. The Assistant Commissioner reiterated the findings of the impugned order during the proceedings.

After hearing both parties and considering the submissions, the tribunal held that since there was no dispute regarding the receipt of inputs, the appellant was entitled to claim CENVAT credit for Inward Transportation Service. The tribunal reasoned that the Measurement Tolerance was related to the input receipt and the supply of finished goods, indicating that the appellant did not receive the inputs in a deficient quantity. Consequently, the tribunal set aside the impugned order, allowed the appeal, and granted any consequential relief deemed necessary.